Group business is back but changing
22 AUGUST 2014 6:10 AM
Shorter meetings, longer lead times and growth in the small meetings sector have been significant changes for this segment.
NASHVILLE, Tennessee—Group business in hotels is mostly back to pre-recession levels but with changes in the characteristics of the business, said hotel executives speaking during the 6th annual Hotel Data Conference hosted by STR and Hotel News Now.
“Every indicator we have of group business is positive,” said Tom Faust, VP of sales for Omni Hotels & Resorts, during a panel titled “Will group business come back?”
“Group pace is up; demand is up; and segment contribution is up. As a brand, we’re about 50% group, and that continues to grow.”
According to data from STR, through July hotels in the United States sold 2.1 million more group rooms than they did during the same period last year. One segment of group business that remains depressed is the government market, with the federal government holding 503 fewer meetings in fiscal year 2013 than in 2012.
“I don’t see government business coming back full force for a while,” said Michael Dominguez, senior VP of corporate sales for MGM Resorts International. “And it’s starting to bleed into the association market because many government employees aren’t able to attend outside meetings.”
Faust said in the past two months he has seen an uptick in business from the government market.
“And while it could be anecdotal, it’s still encouraging,” he said. “Obviously government is a big segment for hotels in Washington (D.C.), but luckily it’s also the strongest association city, so in many cases you have the ability to replace government business with associations.”
A changing marketplace
The panelists described a number of changes in the dynamics of the group travel market.
“We’ve seen some substantial shifts in the market,” Dominguez said. “Meetings are about a half-day shorter than they were, and if you look at the breadth of the hotel industry that’s a lot of roomnights. Meetings are ending at noon or 1 o’clock instead of 5 p.m. so attendees can get home the same day instead of spending another night in a hotel.”
Faust said the biggest change at Omni has been the growth of smaller meetings: 65% of the chain’s meeting business comes from groups that book 50 rooms or fewer at peak. At MGM Resorts, 80% of group business is 100 rooms or fewer at peak, and 62% is 50 rooms or fewer, Dominguez said.
Faust said booking lead times are 7% longer than they were a year ago.
“Lead times getting longer combined with meetings getting smaller seems to contradict itself, but it doesn’t,” he said. “We’ve trained (meeting planners), perhaps accidentally, that because of less availability they need to plan meetings further in advance.”
As meetings business grows, especially from smaller groups, hotel space utilization management has become more important, said Kate Keisling, lead consultant at IDeaS Revenue Solutions.
“Meeting planner management has become very important for hotels,” she said. “It’s critical to know what the planner really needs in terms of space versus what they’re telling you they need.”
Faust said space management is a bottom-line issue for hotels that cater to the group market.
“How we manage our space is critical to our financial success,” he said. “The least glamorous thing we do as hoteliers is manage meeting space availability, but it is probably the most important thing we do on the group side. As the space goes, so goes the hotel.”
The sales process
Even though technology often drives the group sales process, the panelists said it’s important to build and maintain strong relationships with meeting planners and other buyers of group travel.
“Something like 87% of planners work directly with hotels,” said Brian Tkac, senior VP of marketing and sales for Hostmark Hospitality Group. “Yet some sales people say they don’t have the opportunity to bond or forge a relationship with anyone who’s submitting or asking to use our space. That’s not right.”
Keisling said hotel operators need to deploy their sales teams to “get out in front of (sales) leads, not behind them.”
“There’s a huge connection between building a relationship with a planner so you’re top of mind to them when it comes to executing a transaction,” Keisling said. “If you wait until the lead comes in, you’re too late.”
Dominguez and Faust said it’s important to find new ways to introduce creative programming and marketing hooks to attract the interest of planners.
“Our job today is to make (marketing) creative enough so planners want to be there,” Dominguez said. “You just can’t do another dinner or reception because they’ve all been to hundreds of those events.”
MGM recently sponsored a series of recipe showdowns for meeting planners. Planners submitted recipes, and MGM held cook-offs in several major cities, with the winners from each getting together for a final cook-off.
“The whole idea is to be more in the customer’s face and be connected,” he said.
Faust said meeting planners Omni works with said they wanted to learn more about the hotel industry and the meeting process.
“We examined the pain points in the sales process and where we disconnect with our customers and created some professional development events around that concept,” Faust said.
Each event in Omni’s Be Collaborative series for planners looks at a different topic. At one event, several attorneys examined group contracts and topics such as attrition, cancellation and force majeure clauses. Last year, Omni did a road show to eight cities to discuss hotel revenue management with planners. This year, the programming centers on meeting space technology.
The 2020 meeting
The panelists were asked what changes to expect in the meetings market by 2020.
“It will all be tied to what the millennial and Gen Y attendees are looking for,” Tkac said. “They will want to be connected and part of something larger, and they will also want a unique, local, ‘wow’ experience that resonates with them once the meetings are over.”
Dominguez said that in the future meeting attendees will value context over content. Technology also will change.
“Don’t tell me what, tell me how. How does this make me better personally and as a professional?” he said. “The future of meetings is also all about wearable technology. Apps are great, but what are they going to look like when I’m wearing Google Glasses or some other wearable technology? Where we’re headed you won’t be mobile until you have no device. You’ll wear technology like a lanyard.”